Where are the Small Business Strategies?
Well, according to recent studies, the majority of Small and Medium-sized Enterprises* do not engage in strategic planning.
* (SMEs - firms with 200 or less employees)
This is despite plenty of evidence for its effectiveness in increasing competitiveness and long-term survival. Not to mention, the ease of scaling down strategies for smaller organisations [read 'A Simple Strategic Plan' next, for a good example].
Large corporations understand the benefits of designing strategies to improve performance, so why do SMEs hold back?
Strategies that drive Small & Medium Enterprises (SMEs)
Many suggest that SMEs face barriers to strategic planning, in the form of time constraints, a lack of experience, or a reluctance to share ideas. However, Australian researchers have approached the issue from a different angle.
Wang et al. suggest that SMEs tend to associate strategic planning with profit-seeking attitudes, whereas many owners of SMEs have personal, non-economic goals. These might be autonomy or independence, flexibility and lifestyle – motivations which are closely linked to the personal lives of owners.
Yet strategy isn’t just about planning for profits. Strategic planning can help SMEs adjust to a changing market, reduce pressure or stress on key individuals, upgrade technology, prepare for succession or selling, and so much more.
Strategic = Less Likely to Fail
Small & Medium enterprises make up the largest business sector in every world economy and are key drivers of economic growth and employment. They are key to the Australian Government’s Innovation Agenda, in recognition of the role that SMEs play in contributing over 50% of technological innovation with only 20% of R&D expenditure.
The high failure rates of SMEs, particularly in their first years, is supported by statistics. A little-known fact is that SMEs that engage in strategic planning are less likely to fail.
How Can Smaller Businesses Tackle Strategic Planning?
By approaching strategic planning from the perspective of values.
Corporations have long embraced values to drive their strategies, but it perfectly suits the needs of SMEs, too. Values provide a business and its stakeholders a reference for what the company considers desirable, important, beneficial, and constructive. Values influence the choices made by the business owners and management, and are integrated into strategies.
Keep strategic planning simple and create a document that guides future planning, rather than a schedule of tasks. Strategic plans do not have to be complicated documents - in fact, the simpler, the better.
For a simple strategy-planning exercise suitable for micro and small businesses, have a read of 'A Simple Strategic Plan'.
Need to know more?
For tailored advice for designing strategies for Small & Medium-sized Enterprises, please get in contact.